EXPERT OPINION: A Conversation with Hedy Rubinger

February 3, 2014

In this "Expert Opinion" interview, Hedy Rubinger, Partner at Arnall Golden Gregory LLP, discusses state licensure requirements, post-acute providers, regulatory diligence, RIDEA, and more.....

Hedy Silver Rubinger    Watch the video      Read the transcript

Hedy Silver Rubinger is a partner and chairs the Healthcare Practice. She was also elected by her partners to serve on the firm’s Executive Committee.

Ms. Rubinger focuses her practice on the representation of healthcare providers including nursing homes, assisted living facilities, continuing care retirement communities, hospitals, home health agencies, hospices, ambulatory surgery centers, physician groups, and ancillary service providers. She counsels clients on issues related to operations, regulatory compliance, changes of ownership, licensure, Medicare and Medicaid enrollment, certificates of need, managed care, reimbursement, and employment. Ms. Rubinger also represents investors and lenders and has extensive experience in managing the regulatory aspects of healthcare transactions, ranging from single-facility acquisitions to some of the largest multi-state, multiple service-line transactions.

Ms. Rubinger has been appointed by the Department of Community Health, Division of Health Planning, to serve on a technical advisory committee charged with recommending changes to the inpatient healthcare delivery system. Through Ms. Rubinger’s work with her healthcare clients, Arnall Golden Gregory was recognized for accomplishments in delivering transformational client experiences at the fifth annual Client Advisor Awards in the “Large Professional Services Firm” category.

Contact Information:

Hedy Rubinger, Partner
Arnall Golden Gregory LLP
171 17th Street NW Suite 2100 Atlanta, Georgia 30363-1031
404.873.8724 direct
hedy.rubinger@agg.com



Watch the video of the interview: 

Read the interview transcript:

 

Steve Monroe

Sometimes in the healthcare M&A market, one of the most frustrating things in getting a deal done is getting through all the legal and regulatory hurdles that are involved. That can take weeks, maybe months. But if you don’t want to have to spend weeks and months trying to get a deal done, there are attorneys you can hire who can take care of it, who specialize in these transactions and all the regulatory problems that people face.

I’m here today with Hedy Rubinger. She is a partner in charge of the healthcare practice at Arnall Golden Gregory in Atlanta, and she is an expert in getting deals done. So, that’s your thing. I mean, people hire you, they want to get the transactions done. They need you to understand state by state where the problems are, what the issues are. How do you structure a deal so you can minimize a regulatory review and the timing to get it all closed?


Hedy Rubinger

That’s a great question. The first thing we do is we look at the various states in which the provider is operating. We look and see what sort of CON requirements there are, what the licensure requirements are, Medicaid requirements. So we basically look at those first. And each of those within a state has a different timetable.


The goal really is to get to the finish line at the same time in the various states, so depending on the state, we may recommend that the transaction be structured as a change of control as opposed to a CHOW [change of ownership], where a new legal entity becomes the actual provider, and new provider agreements are obtained. So it really just varies from state to state. We look at it as a whole. And then we make a recommendation.


Steve Monroe

You’ve done so many of these, probably in all the active states. I mean, you know exactly what to look for and where the roadblocks are going to be, ahead of time.


Hedy Rubinger

Exactly. We try to stay ahead of it and keep up with what’s happening, with our various contacts in the states; we really work hard to keep ahead of it, and then really sort of manage our clients’ expectations and really help them through the process.


Steve Monroe

I know historically most of your work has been in the skilled nursing side. But are there any regulatory issues or special concerns for assisted living transactions that have been cropping up lately?


Hedy Rubinger

Absolutely. We’ve been doing quite a bit of work in a full continuum of post-acute providers. And with respect to assisted living, our clients that are much more accustomed to a nursing home

sometimes are surprised by different requirements. They think that perhaps because it’s assisted living, that the process might be easier. But within a given state, the process might even be more time-consuming and more burdensome for assisted living.


Examples might be fingerprint checks that are required, and oftentimes investors are in another state, and they are surprised to learn they actually have to visit the state and be fingerprinted in person, depending on the state. Actually, Georgia is an example of that.


Steve Monroe

Where the principals are—


Hedy Rubinger

Where principals actually have to travel to the state yes. Policies and procedures have to be vetted ahead of time. Pre-transaction surveys have to be conducted in certain states for AL. Everything has to be in compliance. That can hold up transactions. So, we just try to get all those issues going as quickly as possible so that we don’t have surprises at the end, where a survey is delaying a whole multi-state transaction.


Steve Monroe

I wouldn’t even think there’d be those kinds of issues on the assisted living side. Are you seeing more licensure categories in states for assisted living that you have to deal with?


Hedy Rubinger

We are. As the continuum of care is evolving, what we’re seeing now in skilled nursing facilities is higher-acuity residents. And then AL and memory care, we’re seeing actually a need for almost an interim type of category. Several states have been implementing new statutes and regulations really to allow certain AL residents to age in place and stay longer. We’re seeing that, and our clients are really getting their arms around those different categories.


Steve Monroe

When regulatory approvals, for whatever reason, seem to be hard to come by or are going to take longer, how do you structure as a management agreement to kind of get around that temporarily?


Hedy Rubinger

The management agreement concept is used fairly often, so when everybody is ready to close a transaction or for whatever reason—either not all of the regulatory approvals have been obtained, or something else is delaying the transaction—then the purchasers will put a management agreement into place and will begin—and it really depends on the state. So the first thing I need to caution is that you look at the state and see whether it’s allowed and what the parameters are. But assuming that a management agreement is allowed in a given state, then some of the economics of the transaction can start changing hands, basically, before the deal actually closes.


Steve Monroe

A lot of times people are just buying or entities are just buying the real estate, whether it’s a REIT or a private investor. Are there different regulatory hurdles for just the real estate purchaser?


Hedy Rubinger

The real estate purchaser, the biggest hurdle that they have is certificate of need. So, what they want to do is make sure that if they’re in a CON state, and it’s a CON-covered service, that that is really covered off on, and it’s very clear who holds the CON at the end of the day.


And then what we are also doing for our real estate-only acquisition clients is a good bit of diligence, however, because even if it’s just a sale-leaseback, our clients really want to know a little bit more about the operating history of their tenant. So we’re doing more and more regulatory diligence for these clients.


Steve Monroe

In the last few years, and we don’t know how long this will continue, but there’s been an uptick in the so-called RIDEA transactions. Are there any special or different regulatory issues involved with RIDEA deals?


Hedy Rubinger

With RIDEA deals, we have a really, sort of a layering of regulatory with tax. And so we work hand in hand with the tax counsel to make sure that the transaction is RIDEA-compliant. But it’s interesting, because our clients that are historically only just landlords actually become the license-holders, and so it’s a whole new world for them. Often times it’s the first time they’ve actually applied for a license. Many times that’s the case. So, we have to work through that process.


Steve Monroe

Have you had an experience where that process kind of killed the RIDEA structure, and they said, nah, we’re just going to do a straight sale-leaseback kind of a thing?


Hedy Rubinger

Sometimes it can be an intimidating process, so, yes.


Steve Monroe

For the buyers, obviously there’s all the regulatory problems, but what do you counsel them on things like non-regulatory things, like an audit or investigations or criminal background check and all that kind of stuff? What are the big issues?


Hedy Rubinger

Right now we’re at a time where so many of our clients are under some sort of audit, we’re just at a time in the industry where there’s just a lot of scrutiny. So really, because there’s so much government scrutiny on our clients, and/or entities that our clients are going to purchase, we really just recommend a thorough diligence so that—a very detailed diligence process, just where at least the questions are asked, so that our clients aren’t surprised at the end of the day that they just acquired an entity that has some problems they weren’t aware of.


Steve Monroe

Yeah. And unfortunately, one time there was an assisted living company that bought a hospice company, and didn’t find out until six months later that there were all sorts of issues, but maybe no one else knew that at the time of their acquisition. There’s not much you can do with that, but…


Now, we have finally the Affordable Care Act, as the implementation is beginning. Most of your work has been really, clients buy a nursing home, buy an assisted living community, buying the companies. But now, as the ACA gets implemented, we’re going to see a lot more integration. How is that, when your clients are—it’s not just a nursing home, or it’s nursing home, home health, hospice, all these things, and these contracts with accountable care organizations—how is that going to impact your job? Make it harder?


Hedy Rubinger

Well, it makes it more complicated.


Steve Monroe

Yeah. More interesting.


Hedy Rubinger

Yeah, exactly. And we need to structure around the federal and state anti-kickback laws, and we make sure that those are reviewed. But we’re just seeing many more transactions where a traditional nursing home-only company is now acquiring other lines of service, so that it can offer a full continuum.


Steve Monroe

Okay, good. Well, I think given my forecast for 2013, it’s going to be—at least on number of transactions, not dollars, it’s going to be a record year, and it seems to be going strong into 2014. So I think you’re going to be a very busy attorney.


Hedy Rubinger

Yeah, thanks. I enjoyed talking to you.


Steve Monroe

All right, well, good luck, and I enjoyed our chat.


Hedy Rubinger

Thank you.
 

 

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